Banks and large lenders use your credit score to estimate financial responsibility. Since they can afford to cherry pick borrowers, they are only interested in making low risk loans for people with collateral or excellent credit. That is why borrowers with poor credit score are guaranteed to waste their time and get declined from bank loans. On the other hand, specialized loan companies on the internet are willing to give instant decision loans for bad credit. It does not matter whether your credit report shows late payments, car repossession, bankruptcy, etc.

Default rates are quite high for unsecured personal loans, since these borrowers are already having financial difficulties. Lenders mitigate the increased risk by asking for higher loan rates and smaller loan amounts. some will even ask for a third party guarantee to secure the loan, especially if you need bigger 5,000 dollar personal loans from banks. If it is so risky, why do so many borrowers continue to ask for loans with no collateral. Well, in the heat of financial difficulties, many just wanted a quick relief and overestimate their ability to pay back on time.

Taking a unsecured loan may not be the best way to establish credit, since not all lenders will report your timely payments to the credit agencies. However, all will report late payments, making things worse if you slip up. If you want to establish credit, a cheaper way may be to use secured credit cards.

If you can find a loan co-signer, try approach credit unions for a $5000 installment loan for 6 months which may be cheaper than online lenders. Note that your co-signer must have excellent credit in order to be the guarantor for the loan. However, it can be a sensitive topic to ask someone to stand as your guarantor. Personally, I have refused requests from friends to be their unsecured loan co-signer since I can get into a lot of financial troubles if they default on payments.

Should I Become A Loan Co-Signer?

To get a guaranteed legit personal loan with bad or no credit, most borrowers will ask a family member or close friend as the guarantor to co-sign the loan. The entire loan application is similar to a normal one, just that both parties must sign on the contract. Most of the time, the guarantor do not fully understand the legal and financial implications when things go wrong. This is because of the trust they have in the borrower who asked them for help. However, they may end up having to pay on the behalf of the borrowers in the worst case and have their excellent credit history damaged in the process.

Furthermore, the moment you co-sign a loan, your own credit to debt ratio is reduced which means you will have less credit and may not be able to get a home loan or car loan until the borrower pays off the entire loan. Therefore, do not be a loan co-signer if you are planning a major purchase and need substantial financing.

Responsibilities of A Loan Co-Signer

Legitimate U.S. lenders can pursue co-signers for delinquent payments. Since borrowers with bad credit are probably in a financial mess, lenders find it easier to pursue co-signers for the owed balance. If you are a loan guarantor and have problems paying for the defaulted borrower, your credit score will be lowered. Note that for personal loans, the co-signer is still responsible for paying back the loan even if the original borrower files for bankruptcy. That is why many lenders are willing to give co-signer loans for people with bad credit! It is easier and cheaper to get back their money!

You can get real $5000 monthly payment loans using a co-signer for mortgage, small business as well as student loans. These are useful when the borrower do not have any established credit or collateral that can be used, except the goodwill of a person who is willing to stand as the guarantor for the loan.